A Look at the Post COVID-19 World.

The worldwide pandemic has been the catalyst for a number of economic changes that we have been marching toward for the last two decades. The Australian economy has changed in several fundamental ways:

1. As the world economies have changed from agrarian, to industrialised to digitised we have lost sight of what builds wealth and what uses wealth. Australia now has an economy where only 26% creates wealth and the rest uses that wealth in one form or another. While Pareto would be fine with that we have to ensure that the 26% is actually building more wealth than is being used. If your family is spending more than it earns your debts will increase. One look at the Australian Debt Clock will show you that as a nation we have been consuming more wealth than we have been creating.
2. Cultural changes have resulted in greater demand on government services without the realisation that it costs government three times more than an individual to do something.
3. A mixture of technology and lifestyle demands has resulted in a substantial upswing in outsourcing. Whether it be cafes, restaurants, gardening, painting, car servicing or airtasker we pay more for what we used to do ourselves.
4. Risk aversion and litigation has increased costs through increased regulation. 
5. Infrastructure spending has moved from economic asset creation to lifestyle asset creation.
6. Activists have been allowed to put a hold on economic growth through what has become known as lawfare.
7. Globalism has resulted in increased expenditure on international projects not necessarily in the national interest.
8. Energy prices have increased because of activism and brainwashing.
9. Taxation has been increased substantially by stealth. The introduction of the GST was supposed to end inefficient state taxes. Not only did that not happen but states have increased taxes on housing and land. 35% of the cost of a house goes to government so effectively 35% of your mortgage payment is a tax. Land tax has increased at 30% per annum over the last 20 years. 
10. Household debt has increase by 9.5% per annum over the last 30 years.
11. At the same time credit has increased by 7.5% per annum. Implying net debt is increasing by 2% per annum. 
12. The standard of education has been reduced and with it the ability of the majority to make balanced decisions.
13. Residential Real Estate is no longer a realistic investment. Pre COVID the average return was 2% after costs. (Not including interest on borrowings.)
14. Cash is no longer a realistic investment. Cash deposits have not even kept up with inflation over the last few years.
15. Inequality has been slowly increasing. The income boom after World War II meant that many in the middle class started to build capital reserves and inequality was reduced. The slowing of income growth has brought Pareto back into play as those with capital grow their income and those with debts reduce their net income.
16. Institutions and Corporations has moved their focus from economic sustainability to social awareness which is increasing costs, reducing income, and spreading the focus over all stakeholders as opposed to shareholders.
17. There have been major changes in technology with the capacity to increase productivity that have not been implemented into daily lives.
18. Many have used computer modelling to drive economic, political, and cultural decisions without reference to the parameters used in such modelling. In years to come it will be asked how we managed to believe economic modelling that is based on changing one parameter at a time. 
19. Our measuring system is out of date.
    1. GDP used to be a measure of economic activity, although that can be questioned in the new economy, not a measure of economic or social wellbeing. (Ardern was on the right track but forgot the political golden rule of having the discussion before legislating a change.)
    2. Unemployment. Commentators put the real figure anywhere between 5% and 49%.
    3. Wages. Within SME’s wage have little to do with earned income.
    4. CPI. Putting a blanket over a basket of goods and service makes no sense in this diverse economy. 

In this paper I set out to show that there has been a need of change for some time, however the conservative nature of the Australian people has been unwilling to embrace reform. That may be because our politicians have been unable to sell us the changes, or it may be because we have become so risk adverse and obsessed with our lifestyle that we simply do not want to change. This crisis is an opportunity to reset.

We got out of balance.

Nationally

As a nation we got out of balance in:

Politics.

The majority put their heads down as our education system was overrun by postmodernist Marxists. At the same time we demanded more from government which lead to the socialist government we have today. The government controls every aspect of our lives, we are just seeing it more now. Listening to the news over the last 6 months all you ever here is ………………………….. is happening, What’s the government doing about it? Even the supposedly right wing commentators have been focusing on what the government should be doing as opposed to what are we doing.

Economy. 

We got hung up on two things, outsourcing and lifestyle. In the last 30 years we watched as 10% of GDP disappeared. About 600,000 jobs were lost, but because the majority wasn’t affected nobody noticed. Now the same thing is going to happen in 12 months and we will all notice.

Manufacturing dropped by 10% of GDP and the finance industry picked it up. But money running around in circles doesn’t create wealth. The Hayne Royal Commission lead the way by exposing the fee rorts in the banks and retail super funds, now COVID-19 is exposing the Industry funds.

The mining boom of the 00’s paid for our excesses, but then we spent it and more developing an outsourcing culture that increased the cost of everything.

Rex Connor has had his wish. We dig up our national wealth and sell it overseas so as a nation we do not have to work.

Culture.

We threw away religious beliefs and a quest for a moral life. David Hume said we are influenced more by our feelings than reason. Nothing we do is rational. Scott Adams reiterated that in Winning Bigly. Because of this religion was used as a moral anchor. The enlightenment tried to throw religion away. Kant did his best but could only come up with The Categorical Imperative loosely translated as Do unto others as you would have them do unto you. Stephen Hicks wrote”…from the postmodern perspective the universe has been metaphysically and epistemologically shattered. We cannot turn to God or to nature, and we cannot trust reason or mankind.”  So, we believe in nothing but lifestyle and the moment. But nature abhors a vacuum, so we believe in a whole lot of unproven philosophies such as climate change, equality, racism, sexual orientations. (As an aside I read that during the COVID-19 crisis it appears only males and females have died, I wonder what happened to the other 57 genders.)

Finance.

We have been living in blissful ignorance for the last 29 years. We continually hear of constant growth rates of 4 – 5%. All this time the cash rate has been about 4 – 5%, the return on residential property is quoted as 2% after costs. The average super return has been 7.1%, which is 6% after tax. During the same time the share market has returned 11.4% or 9.7% after tax. The bottom line is that the $200Bn finance industry has produced a return of about 1% return to the average punter after allowing for inflation.

A quick look at the 2019-10 FY shows the S&P 500 is down 1%, the NASDAQ is up 13%, the Shanghai Index is off 4% but the ASX 200 is down 19% and the All Ords 18.5%. (I understand that we pay more dividends, but let’s get real.)

As A Nation.

We have thrown away our freedom by demanding government looks after us. We have developed a service driven economy financed by mining, agriculture, International tourism, and education. We have discarded our moral beliefs and replaced them with constructed fantasies. And we have kidded ourselves that we are doing OK financially when the truth is that Pareto is still correct 20% are paying the way for the other 80%.

Individually.

As individuals we need to:

Lifestyle.

Re-evaluate the emphasis we put on lifestyle as a function of our balance. The single greatest thing we can do is to embrace hunger. We used to hang out for a weekly coffee at a café. That moved to a twice or thrice daily event. The more you do it the more you want to do it. We used to dine out once a month, that got to how many times a week? Binge watching TV shows, really? I know many couples that are saving upward of $500 per week and having fun. Bikes that haven’t been used for years have come out. That great experience is so much better when you embrace the hunger of waiting for it.

Job Satisfaction.

This has been a great time to evaluate how much you like the job and how much you like the environment is which the job is played out.

Financial Reward.

You will earn more in your life from unearned income than from earned income. Some have spent this time focusing on their super funds or how to pay off a mortgage faster. Your financial rewards come from many areas and many haven’t been making the most of their resources.

Kudos.

The last few weeks have been tough for many people, and I believe many have had the opportunity of re-evaluating their need for kudos. Compliments and congratulations are so much better when they come from you to you.

Morals / Ethics.

In Christianity the 10 commandments can be brought down to two, with the second one being to do unto others as you would have them do unto you. A moral and ethical life is one where you think of others before you act. The problem with that for many is that they haven’t spent enough time with themselves to know who they are, so they really don’t know how they want to be treated. A little more emphasis on living with our fellow man could balance out some of the lifestyle excesses.

How to Protect Our Freedoms and Our Livelihoods in the Age of Crisis.

Protecting Freedom

The best way of protecting our freedom is to take responsibility for ourselves become self-reliant and stop asking the government to help us out.

Freedom is the absence of restrictions and an opportunity to exercise one’s rights and powers.

Acting without restrictions means telling the government to undo the red tape and allow us to live without restrictions. But for every action there is an equal and opposite reaction and that means that to be free you need to accept responsibility for your behaviour. You can’t exercise your rights if you do not accept the responsibilities first.

Protecting Our Livelihoods.

Livelihood is a means of securing the necessities of life.

The first thing you would have to do is ascertain what you consider a necessity of life, and that will be different for everyone. Some would consider breathing air with less than 400mg/l of CO₂ is a necessity of life. 

For some a new pair of shoes weekly or dining out 4 times a week would be classified as necessary. For others, a 5am surf, fishing when the wind is variable, watching footy on a Friday night or having a punt on the nags would be considered necessary.

 For some an income of $40,000 is a necessity, for others they couldn’t live on less than $200,000. 

You can’t protect your livelihood if you do not know yourself. As with all problems if you spend the time defining the problem and quantifying it you are 90% of the way to solving it.

Summary

There has been a need to change but we have been like frogs sitting in a pot of water being brought to the boil. We have lost balance as a nation and as individuals.

As a Nation we have outsourced our politics, our economy as well as our culture and finances. They have taken our freedoms one by one but few noticed. It is time to become more aware of our environment and ourselves and to take back control of our duties and responsibilities.

Conclusion

To protect our freedoms and livelihoods in the age of crisis we must take our responsibility back and head off the march toward a UBI which is being driven by globalism, socialism, and the elites.

We need to look life in the face and embrace the fact that suffering is a part of life, and if you rescue someone they will not grow. Freedom only comes to those that want to be free.

Given the Pareto Principle is still validated in this crisis it is necessary to increase the size of the pie to enhance the livelihood of the 80%.